Correlation Between Belden and ADTRAN
Can any of the company-specific risk be diversified away by investing in both Belden and ADTRAN at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Belden and ADTRAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Belden Inc and ADTRAN Inc, you can compare the effects of market volatilities on Belden and ADTRAN and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Belden with a short position of ADTRAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belden and ADTRAN.
Diversification Opportunities for Belden and ADTRAN
Good diversification
The 3 months correlation between Belden and ADTRAN is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Belden Inc and ADTRAN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADTRAN Inc and Belden is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Belden Inc are associated (or correlated) with ADTRAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADTRAN Inc has no effect on the direction of Belden i.e., Belden and ADTRAN go up and down completely randomly.
Pair Corralation between Belden and ADTRAN
Considering the 90-day investment horizon Belden is expected to generate 8.21 times less return on investment than ADTRAN. But when comparing it to its historical volatility, Belden Inc is 2.62 times less risky than ADTRAN. It trades about 0.11 of its potential returns per unit of risk. ADTRAN Inc is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 839.00 in ADTRAN Inc on October 20, 2024 and sell it today you would earn a total of 180.00 from holding ADTRAN Inc or generate 21.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Belden Inc vs. ADTRAN Inc
Performance |
| Timeline |
| Belden Inc |
| ADTRAN Inc |
Belden and ADTRAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Belden and ADTRAN
The main advantage of trading using opposite Belden and ADTRAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Belden position performs unexpectedly, ADTRAN can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ADTRAN will offset losses from the drop in ADTRAN's long position.| Belden vs. Clearfield | Belden vs. Comtech Telecommunications Corp | Belden vs. Knowles Cor | Belden vs. Extreme Networks |
| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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